> And what we are seeing, for the most part, is that margins matter. Both gross margins and operating margins.
No kidding. Of course margin (and cash flow) matters. That is the very definition of valuation. The tricky part is timing. Are current margins likely to be the same as future margins?
There are some businesses that are investing heavily in their business to grow new categories (e.g. AMZN) or build the network. In those cases, you won’t see strong margin and cash flow early on.
Uber is a special case where they are losing money even at scale. Uber is a great idea, but far overvalued by investors like SoftBank. It needs to drop down below $10B. That will also mean laying off most of the employees and raising prices.
No kidding. Of course margin (and cash flow) matters. That is the very definition of valuation. The tricky part is timing. Are current margins likely to be the same as future margins?
There are some businesses that are investing heavily in their business to grow new categories (e.g. AMZN) or build the network. In those cases, you won’t see strong margin and cash flow early on.
Uber is a special case where they are losing money even at scale. Uber is a great idea, but far overvalued by investors like SoftBank. It needs to drop down below $10B. That will also mean laying off most of the employees and raising prices.
WeWork is the same. They just got their faster.